4 min readMumbaiAug 10, 2024 04:30 AM IST
First published on: Aug 10, 2024 at 04:30 AM IST
Net inflows into equity mutual fund schemes declined by 8.6 per cent on a month-on-month basis to Rs 37,113.39 crore in July, as flows into small, mid and large cap funds moderated, the latest data from the Association of Mutual Funds in India (AMFI) showed.
In June, flows into equity-oriented schemes touched an all-time high of Rs 40,608.19 crore. Despite witnessing moderation in July, inflows into equity schemes continued to remain positive for the 41st month.
The contribution of systematic investment plans (SIP) touched an all-time high of Rs 23,332 crore in the reporting month, compared to Rs 21,262 crore in June. In the reporting month, the SIP assets under management (AUM) were at a record high of Rs 13.09 lakh crore and the number of SIP accounts stood at its highest ever at 9.3 crore.
“It’s evident that mutual funds have become an integral part of retail investors’ financial strategies. SIP contributions reaching an all-time high of Rs 23,331.75 crore in July 2024 reflects the growing financial discipline among retail investors, helping them build wealth systematically over time,” said Venkat Chalasani, Chief Executive, AMFI.
The net assets under management of the mutual fund industry grew by 6.23 per cent to touch a record high of Rs 64.97 lakh crore as on July 31, 2024. This rise was largely driven by increase in net inflows into debt-oriented mutual fund schemes. In July, net assets under management of equity mutual funds stood at an all-time high of Rs 29.33 lakh crore, which is nearly 45 per cent of the industry’s AUM.
Small cap funds received inflows of Rs 2,109.2 crore in July compared to Rs 2,263.47 crore in June. Net inflows in the mid cap funds stood at Rs 1,644.22 crore, as against Rs 2,527.84 crore in the previous month.
Flows into large cap funds moderated to Rs 670.12 crore compared to Rs 970.49 in June.
Among equity mutual fund schemes, sectoral/thematic funds garnered the highest net inflows of Rs 18,386.35 crore.
However, flows into this category of funds dropped compared to Rs 22,351.69 crore of flows in June, the AMFI data showed.
Flexi cap fund witnessed Rs 3,052.92 crore worth of inflows compared to Rs 3,058.81 crore last month.
“The inflow data shows an underlying change in the mood of investors. They are shifting their focus from the core side of the portfolio to the tactical or satellite side of the portfolio. This is evident from the fact that in the last two years, we saw small caps getting heavy inflows, which now is tapering as investors are now shifting to sectoral funds. It will be interesting to see if this is a shift in risk profile to it is just blatant near term return chasing,” said Swarup Mohanty, Vice Chairman & CEO at Mirae Asset Investment Managers (India).
According to Jean Christophe Gougeon, Director & Chief Marketing Officer, Sharekhan, by BNP Paribas, the impact of the tax changes implemented in Budget 24-25 may have led to the sluggish investor sentiment.
In the Budget 2024-25, announced on July 23, the government proposed to increase the rate for short-term capital gain on units of equity-oriented mutual funds to 20 per cent from 15 per cent. The long-term capital gains tax on all financial and non-financial assets was also proposed to be increased from 10 per cent to 12.5 per cent.
The debt oriented mutual fund schemes saw net inflows of Rs 1,19,587.6 crore in July, as against outflows of Rs 1,07,357.62 crore in the previous month. Inflows into liquid funds was Rs 70,060.88 crore in the reporting month, compared to outflows of Rs 80,354.03 in June. Net inflows into hybrid funds stood at Rs 17,436.09 crore, as against Rs 8,854.74 crore in June.
Inflows into gold exchange-traded funds (ETF) touched a record high of Rs 1,337.35 crore in July. Higher inflows into gold ETF can be attributed to the drop in gold prices after the government, in the Budget 2024-25, announced reduction in customs duty on the yellow metal to 6 per cent from 15 per cent earlier, said Chalasani.
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